Chalk v. Daggett

• Decision Date: 09 January 1924
• Docket Number: (No. 417-3226.)
• Citation: 257 S.W. 228
• Parties: CHALK et ux. v. DAGGETT.
• Court: Texas Supreme Court

257 S.W. 228

CHALK et ux. v. DAGGETT.

(No. 417-3226.)

Commission of Appeals of Texas, Section B.

January 9, 1924.

Error to Court of Civil Appeals of Second Supreme Judicial District.

Action by John P. Daggett against J. W. Chalk and wife. Judgment for plaintiff was affirmed in part and reversed in part (204 S. W. 1057), and defendants bring error. Reversed, rendered, and remanded.

T. T. Bouldin, of Matador, and Bradley, Burns & Hiner and A. W. Christian, all of Fort Worth, for plaintiffs in error.

Bryan, Stone & Wade, of Fort Worth, for defendant in error.

STAYTON, J.

John P. Daggett brought this suit against J. W. Chalk upon two promissory notes, and against him and his wife to foreclose a mortgage upon a section of land in Motley county. Chalk entered a general denial, and pleaded that, at the time each of the notes was given, he and Daggett entered into parol contracts whereby certain previous partnership affairs between them were to be settled by an accounting, the amounts found to be due Chalk, as a result, were to be credited on the notes, and the notes were not to be collected until the accounting was had. In order to define the first point involved in the case, it may be observed that the answer also pleaded that no accounting had been effected, averred certain amounts due to Chalk by Daggett arising out of the partnership affairs and by reason of a conversion of certain partnership property by Daggett, claimed some of the amounts as credits on, or by way of set-off against, the notes, and made appropriate allegations for an accounting. The conclusion of the answer contained a prayer for general relief. Plea in abatement by Daggett to the allegations of the answer for an accounting was overruled by the trial court, as were a general demurrer to the defensive matter and a special exception to allegations of one of the partnership credits averred to be allowable against one of the notes. But special exception to the allegation of conversion was sustained, upon the ground that it was misjoined, and special exception to the part of the answer alleging that the notes "were not to be paid," etc., was also sustained, upon the ground that the written contract could not be varied by parol. The latter ruling is the one now involved in the case. The Court of Civil Appeals decided (204 S. W. 1057) that it was correct.

The disposition of the exceptions in the light of the answer shows that all, except the misjoined, averments as to the allowance of credits on the notes, and as to the suit for accounting, were left undisturbed, and that those to the effect that the notes would not be collected until after an accounting was completed between the parties were, at least partially, excluded. The answer alleged consideration for each of the notes; and no question of want or failure of consideration is here raised or involved. No questions of fraud, accident, or mistake were pleaded, or are raised. While the allegations as to one of the notes could hardly be construed as being clearly to the effect that the agreement that was eliminated was oral, the case appears to have been tried below, and to be presented here in connection with the allegations of an oral agreement as to the other note, upon the theory and proposition that they were wholly to that effect. This view will be taken of them. A decision of the main point involved may be made without a discussion of the question of whether the plaintiffs in error, under the allegations which the trial court allowed to stand, were actually deprived of the defense involved in the special exception, and of whether, upon a view of the whole record, the ruling of the trial court probably caused the rendition of an improper judgment.

The proposition submitted by plaintiffs in error is somewhat broader than the ruling of the trial court went. It is that, where a note was not intended as a complete and final settlement of a whole transaction, the true amount owing from one party to the other not having been ascertained and an accounting being necessary to determine it exactly, allegation of an oral agreement for an accounting and the giving of proper credits on the note before it should be collected did not violate the rule against varying a written instrument by parol. They also argue that the true consideration of written contracts may always be established by parol.

They cite Allen v. Herrick, 55 Tex. Civ. App. 249, 118 S. W. 1157, and Hansen v. Yturria (Tex. Civ. App.) 48 S. W. 795, 796, for their main position. The excluded portions of the answer do not aver that the notes were intended as complete and final settlements of a whole transaction consisting partly of written, and partly of parol, contracts. It seems to be well settled, however, that in a case of the latter description, while the parol parts have been held to be enforceable independently of the written parts (Chapman v. Witherspoon [Tex. Civ. App.] 192 S. W. 281; 2 Elliott on Contracts, § 1633) or by way of cross-action (Hansen v. Yturria), or in a proper case by set-off (Allen v. Herrick), they cannot be offered as ordinary, nonactive, nonoffensive defenses to recovery upon the notes, where in conflict with the material and express obligations of the writings (2 Elliott on Contracts, §§ 1631, 1633; note 43 L. R. A. 473; Simkins on Contracts, p. 463; 10 R. C. L. 1035, 1036, 1038). One of the material, express, and unambiguous obligations of the notes sued on was payment on fixed future dates. Parol contracts for payment on condition of subsequent undated accounting, as here, would qualify and vary both the absolute obligations to pay and the definite dates of payment, and would therefore have no effect upon the writings. Saunders v. Brock, 30 Tex. 421; Shaw v. Lumpkin (Tex. Civ. App.) 241 S. W. 220; Key v. Hickman (Tex. Civ. App.) 149 S. W. 275; Security Life Ins. Co. v. Allen (Tex. Civ. App.) 170 S. W. 131; Hendrick v. Chase Furniture Co. (Tex. Civ. App.) 186 S. W. 277; Long v. Riley (Tex. Civ. App.) 139 S. W. 79; Ablowich v. Greenville Nat. Bank, 22 Tex. Civ. App. 272, 54 S. W. 794. Not even may time of payment arising by legal implication be altered by oral negotiations. Rockmore v. Davenport, 14 Tex. 602, 65 Am. Dec. 132.

Allen v. Herrick, cited by plaintiffs in error, was a case where a note was given for a past-due debt, estimated at $3,640.20; whereas, the real debt for which it was given was only $2,140.20. To the extent of $1,500, the answer claimed a partial absence of consideration moving from payee to payor. As is usual with promissory notes, that phase or side of the consideration was not expressed or mentioned in the writing. It was also a case in which an account, that "may have been an unliquidated demand," was sought to be established as a set-off against the note and in which an application of set-off, as permitted in equity, was made. Much, if not all, of the reasoning which apparently conflicts with the opinion of the Court of Civil Appeals in this case, may be attributed to a showing of the necessary elements allowing set-offs in equity (see Simkins on Equity, 843-847, and 24 R. C. L. 857); to a misapprehension of the holding in Nalle v. Gates, 20 Tex. 315, occasioned, manifestly, by the erroneous fourth paragraph of the syllabus of the latter case; and it may be gathered from a perusal of the cited Pennsylvania case, to an assumed presence of an element of fraud. It has been observed that, in the ruling in the present case, no silent consideration, want of consideration from payee, set-off, or fraud is involved. In some of these respects, also the present case differs from the Hansen Cases. In those cases a sufficient consideration, and the controlling one, there called a "defense" in the broader sense, was that damages for the breach of an oral contract which, with the note, was effected in settlement of a certain previous, extraneous controversy, could be the subject of counterclaim by defendant in a suit by plaintiff upon the note, as against an exception that an unliquidated demand could not be set off against a liquidated demand. The ruling below involved neither a counterclaim nor, if precisely examined, a settlement of a previous, extraneous controversy.

As to the allegation in the answer of plaintiff in error to the effect that Daggett knew he was indebted to Chalk in greater amount than that of the smaller note and that the note was given to obviate a threatened execution by a judgment creditor of both parties, it may be observed that, if the excluded defense should be viewed as asserting a contemporaneous oral obligation that the note would not be payable at all, it would be subject to the same principle applicable to a conditional payment, emphasized in extent but not in quality. Dolson v. De Ganahl, 70 Tex. 620, 8 S. W. 321. The force of a written contract may not ordinarily be "destroyed" by a contemporaneous parol agreement. Lanius v. Shubor, 77 Tex. 24, 13 S. W. 614; Roundtree v. Gilroy, 57 Tex. 176.

The suggestion, upon the basis of Clayton v. Western National, etc., Co. (Tex. Civ. App.) 146 S. W. 695, and Watson v. Rice (Tex. Civ. App.) 166 S. W. 106, that the obligation to pay that is contained in a promissory note may be varied by parol agreement, because such an agreement constitutes a part of the consideration, is thought to be erroneous. A written promise to perform in the future, whether by money or in services, is a contractual consideration which, unlike one that is not mentioned or is mentioned merely as a receipt or by way of acknowledgment of something performed in the past, cannot be set aside on any different principle from that applicable to other material future undertakings expressed and defined by the written contract. Matheson v. C-B Live Stock Co. (Tex. Civ. App.) 176 S. W. 734; Luckenbach v. Thomas (Tex. Civ. App.) 166 S. W. 102, 10 R. C. L. 1045; Simkins on Contracts, pp. 457-460.

Clayton v. Western National Bank has been limited, by...